Samsung’s biotech arm Samsung BioLogics inflated its value ahead of its 2016 listing, willfully breaching accounting standards, South Korea’s financial regulator has found, capping months of speculation surrounding the company’s accounting practices, according to reports published on Wednesday.
South Korea’s Securities and Futures Commission (SFC) has suspended BioLogics’ stock, fined the firm 8 billion won ($7.04 million), and has tasked the stock market operator — the Korea Exchange — to review whether Samsung BioLogics should be delisted altogether, according to Nikkei.
The news likely poses a significant hurdle for the tech giant that is making a significant investment in health to reinvigorate its growth engine. After building up a biosimilars group and branching out into new drug development, Samsung in August announced plans to make a big push on the biopharmaceuticals front over the next three years.
South Korean regulators have been investigating allegations that the BioLogics unit of the family-run conglomerate violated accounting rules by amending the valuation method of its stake in a joint venture – Samsung Bioepis – in 2015 to inflate profit before listing a year later. Kim Yong-beom, vice chairman of the commission, has advised the firm to dismiss its chief executive, Reuters reported.
Samsung has denied any wrongdoing and said it plans to challenge the ruling. In a statement to BioProcess Insider, Samsung BioLogics “apologized to its clients and shareholders for the confusion caused by the recent accounting issue” and stressed that no accountancy rules had been breached.
The SFC decision has also impacted the BioLogics’ auditors — Deloitte Anjin and KPMG Samjung — that have been banned from auditing the company for three and five years respectively, according to the Nikkei report.
The best place to read Endpoints News? In your inbox.
Comprehensive daily news report for those who discover, develop, and market drugs. Join 51,200+ biopharma pros who read Endpoints News by email every day.Free Subscription